Weekend elections: Democracy and the fiscal compact

Francesco Daveri , 8 May 2012Voters in France, Greece, Italy, and Germany rewarded politicians who opposed austerity. This column argues that attempts to fulfil campaign promises will run up against a hard constraint. The countries whose voters are calling for looser fiscal policies are those where public spending rose fastest since the birth of the euro. The only way out of today’s difficulties is to use the flexibility already in the Fiscal Compact and continue with bold implementation of the economic reforms that are under way.Full Article: Weekend elections: Democracy and the fiscal compact

Brussels (AFP) - Eurozone leaders will hold an emergency summit in Brussels Tuesday to discuss the fallout from Greek voters' defiant "No" to further austerity measures, with the country's Prime Minister Alexis Tsipras set to unveil new proposals for talks.

On January 7, long before Italy was in the spotlight of mainstream media, I wrote Italy The Invisible Elephant.It was five or six months before Italy became an uncloaked popular economic topic.However, "elephant hunting" is now a popular sport and mainstream media has done a better job at spotting the next one (with help of S&P threats to France's AAA rating of course).

ATHENS/MADRID — Trains and ferries were cancelled and hospital staff walked off the job in Greece on Wednesday and thousands were due to demonstrate across Spain as May Day triggered protests against harsh government spending cuts.
Separately, Turkish riot police fired water cannon and tear gas to disperse crowds gathering in central Istanbul for a rally on what has become a traditional labour holiday.

It's a sea of red in the US and European equity markets following the victory of president Obama and statements made by ECB president Mario Draghi. US equities are now down well over 2% and most of Europe was down between 1 and 2 %.
Things would not be any different if Romney had won.
Regardless of who won, the global headwinds would have been the same, and the global economy is in a recession already (it's not widely recognized yet, but it soon will be).

Inquiring minds might be wondering what is the best way forward for Greece. To some extent, the question is akin to asking "would you prefer to lose a one hand and one eye or your left leg?"
I have been thinking about the Greece "least bad" question for quite some time, but what brought about this post is a "by the editors" article on Bloomberg.

If the leaders of the European Union cannot agree soon to some sort of 'master plan' that saves Greece, shields Spain and Italy from the contagion of wholesale investor selling, protects France from a fatal downgrade, avoids failure for the world's largest banks, and persuades German voters not to dump its government ... all hell will break loose in Europe, the UK, USA, etc. Portugal, Ireland, Italy, Greece, and Spain are more than 3.1 trillion Euros in debt. France — which, according to Moody's, is now in danger of suffering a fatal downgrade of its debt — owes another 1.6 trillion.